Pending Catholic Hospital Mergers Threaten Health Care Access in California Communities

Pending Catholic Hospital Mergers Threaten Health Care Access in California Communities
Amidst a slew of recent hospital system acquisitions and consolidations, Dignity Health and Catholic Health Initiatives (CHI) are seeking to merge into one colossal system. If approved, they would be the largest non-profit hospital system in the country. Dignity Health has 39 hospitals, in California, Arizona, and Nevada, and provides care in 21 states. CHI spans 18 states and has 103 hospitals, including four academic health centers, major teaching hospitals, and 30 critical access facilities. The new merged system would cover 28 states and have 139 hospitals, more than 700 care sites, and a combined revenue of 28.4 billion dollars. In California alone, Dignity Health has 31 hospitals across 17 different counties and CHI does not presently have any hospitals.

This proposed merger could potentially impede access to critical health services for California communities. Specifically, this merger arrangement puts at risk access to reproductive health services, gender-affirming care, and services for low-income communities, including Medi-Cal enrollees and recipients of charity care and community benefits. But the California Attorney General (AG) must approve any proposed sale, transfer, lease, exchange, option, conveyance, or other major transaction or change in governance of a non-profit health facility. In addition, the AG can impose conditions on their approval. State law requires the non-profit to seek approval by submitting written notice of a proposed merger, including supporting documentation about various aspects of the transaction. In transactions involving general acute care hospitals with more than 50 beds or where the transaction may result in a change in the availability or accessibility of services, the AG must prepare an independent health impact assessment that analyzes the merger’s impact on:

  • Charity care;
  • Community benefits;
  • Access to services for Medi-Cal patients, indigent patients, and other groups of patients;
  • Staffing and employee retention;
  • Access to emergency services, reproductive health services, and other health care services provided at the hospitals at issue; and
  • Effectiveness of any proposed measures to limit harm from changes that could impact access to care.

Before issuing a decision, the AG must conduct public hearings in all the counties where health facilities subject to the merger are located. When deemed appropriate, the AG can waive these requirements. In fact, Dignity Health and CHI initially requested such a waiver of the AG’s formalized process, but rescinded the request before the AG had made an official determination on the waiver application.

Dignity Health and CHI are both Catholic health systems. Catholic hospitals typically follow the Ethical and Religious Directives (ERDs) promulgated by the United States Conference of Catholic Bishops. The ERDs forbid many reproductive health services, including all birth control methods, sterilization, miscarriage management, abortion, the least invasive treatments for ectopic pregnancies, and some infertility treatments. The ERDs provide no exceptions for risks to a patient’s health or even life.

Fourteen of the 31 Dignity Health hospitals in California do not strictly follow the ERDs. They are subject instead to the “Statement of Common Values,” and may perform some reproductive health services that are the ERDs prohibit; however, abortion, assisted reproductive technologies, and what they call “euthanasia” are still forbidden.

The merger agreement contains a provision that prohibits the new system from reducing access to any of the services currently provided at Dignity Health hospitals for five years after the agreement takes effect. Dignity Health and CHI assert that this five-year provision protects access to existing services offered at Dignity Health hospitals, however it is not clear what services are currently being provided at each hospital. While some hospitals may be perform tubal ligations and provide contraceptives, for example, others may not or may only provide them under limited circumstances. The only way of ensuring that there are no changes in the services available is to conduct a thorough health impact assessment for each hospital to establish what baseline of services they provide and under what circumstances they are performed.

The Dignity Health and CHI merger request is further complicated by the fact that the Catholic Church just released an updated version of the ERDs in July. Significant additions to the section governing collaborations provide that any mergers, including the one at issue here, must be operated “in full accord with the moral teaching of the Catholic Church,” including specific ethical and religious Directives.

Finally, the merger agreement provides a loophole to their apparent five-year protections on access to existing services and care. This provision would allow the new merged entity to escape its services obligations by enabling the new system to rid itself of any hospital(s) that are providing services prohibited by the Catholic Church. If the local Bishops or other Catholic authorities decide it is unacceptable that some Dignity Health hospitals provide services prohibited by the Church, they can force these hospitals out of the system.

Given the potential negative impact of this merger on Californian’s access to essential health care services, it is critical for advocates to provide public input at the AG’s upcoming public hearings on the merger. After the health impact statements are completed, the AG’s office will hold public hearings in each of the 17 affected counties (Kern, Los Angeles, Merced, Nevada, Sacramento, San Bernardino, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Cruz, Shasta, Siskiyou, Tehama, Ventura, and Yolo). The public hearings can be no sooner than 10 days after the health impact statements are completed and made available for public review, and the AG must provide at least 14 days’ notice of the time and location of the public hearings. Advocates should keep an eye out for meetings in these counties and provide oral or written comments on how the community may be negatively impacted by the proposed merger. Notices of the meeting dates and times will be posted on the AG’s website, and four such notices have been posted thus far: August 23 in San Francisco, August 24 in Sacramento, August 29 in Los Angeles, and September 6 in Yolo. Reach out to us at the National Health Law Program for more information about how to get involved.

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